TALKS are under way about the second phase of the coalition Government’s five-year term, a Conservative cabinet minister has revealed.

Much of the coalition agreement is expected to have been implemented or steps to that effect within the next year and Transport Secretary Phillip Hammond said the coalition was now looking to the future.

He said: “Everybody on both sides of the coalition wants to see all of the coalition agreement delivered.

“That isn’t to say that as we go on through the Parliament we won’t need to look ahead to the next stage of reform.”

Mr Hammond added: “I guess in another year or so we will have in the pipeline legislation or steps that will deal with most of the measures in the coalition agreement.

“We will be looking to the next stage then. There are talks going on all the time.” He insisted the parties remained separate and would fight each other in elections, before returning to “doing the best” for Britain in the coalition.

He added: “Very often when we do have robust discussions, the fracture lines are not between the two parties. They are within the two parties.

“I could think of two major issues at the moment where we are having a robust discussion within the Government.

“And on both sides of the argument are both Conservative and Lib Dem cabinet ministers. This is not about party positions. It is about people genuinely having different views about the best way forward for Britain.”

Mr Hammond insisted the Tories could return politically in the North East despite cuts in public sector jobs having “an immediate and very painful effect”.

“But most people that I talk to also understand that the region’s prosperity in the future depends on getting a better balanced economy, that it depends on getting real growth in the industries and sectors where the North East has strength.”